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Canada Post frees up online borders

With only 32 million people — roughly one-tenth the population of the United States — dispersed over a vast area, Canada hasn’t been considered a “must enter” market by most U.S. mailers. But in hopes of maximizing their stateside operations with relatively little effort, a number of U.S. multichannel merchants are partnering with Borderfree, a division of Canada Post, to reap incremental revenue from our neighbors to the north, primarily by setting up a Canadian-friendly microsite and assisting with product fulfillment.

“Most of our customers aren’t looking to set up a big Canadian arm,” says Patrick Bartlett, president of Ottawa-based Borderfree. “Instead, they are looking to grab a leg up on specific assets they have in the U.S., like warehousing and added buying capability.” Because they generally lack knowledge about the Canadian market, import fees, and privacy regulations, “they come to us to quantify what specific ‘Canadian’ opportunity is right for them.”

Brookstone, a $500 million electronics, tools, and gifts merchant, has worked with Borderfree since 2002. Before then, admits Steve August, Brookstone’s operational vice president of customer marketing, Canada was “virtually off Brookstone’s radar,” even though its headquarters in Merrimack, NH, are only a few hours from the Canadian border.

“In the beginning there weren’t a lot of [Canadian] names on the market and not a lot of cooperative databases,” August says. “But the contract was always just an annual one, and over time the service has benefited us.” In fact, Brookstone’s Canadian sales rose 40% in 2004; last year they climbed another 35%.

Borderfree charges about an annual fee of $2,000-$2,500 for software and assistance in creating a “Canadian portion” of a U.S. Website. The Borderfree software integrates with the core e-commerce software to convert prices and delivery charges from U.S. dollars to Canadian dollars; apply the appropriate sales taxes; add, delete, and maintain the stock status of specific SKUs; and tweak copy where necessary. It takes about a month, Bartlett says, to have the Canadian version of the site up and running.

The annual fee also includes a Borderfree online credit system that allows the merchant to charge shipping costs to its U.S. warehouse, where paperwork is processed to enable orders to pass through Customs. This lets the merchant to provide the Canadian consumer with the fully landed price — a price that includes Customs charges — so that the buyer isn’t hit with additional fees at delivery.

U.S. merchants can also contract with Borderfree for additional services at an added cost. Borderfree will help companies establish circulation plans should they wish to mail print catalogs into Canada, for instance, and fulfill catalog requests for companies that participate in its promotional campaigns.